The proper valuation and management of intellectual property is an area where accountants add value to their client services.Â Often companies engage accountants and other financial experts to defend both plaintiffs and defendants in intellectual property (â€œIPâ€) disputes. As this video shows, similarity in names or trademarks can be at the heart of these disputes.Â

In this David versus Goliath case, a small software firm, specializing in business management and cost accounting software for bakers got tired of being confused with the popular reality show known as Cake Boss. They had been using the name since 2007, which was well before Discovery Communications, The Learning Channelâ€™s parent company began in 2009.Â After co-owners Â John and Kelly Masters were ignored by Discovery communications, they filed suit to protect their trademark and in July 2010, a federal court judge in Seattle, Washington issued a temporary injunction that barred the show from using the name â€œCake Bossâ€ following the last episode of the showâ€™s third season.Â Despite a multi-million dollar investment in the show, it was found that Discovery did not even make a rudimentary attempt to make sure the name was not in use by Masters. At stake was not only the show, but sales of related merchandise.

The case was eventually settled at the end of 2010 so that Â “Cake Boss” Buddy Valastro can use the name on the show and Masters can still use it for its software and other items.Â Â The injunctive relief in this case proved to be quite expensive.Â In the end, the case serves to remind accountants and other financial experts concerned with the valuation of trademarks that performing and documenting fundamental internet searches on trademarks, trade names, etc., should be part of the due diligence process for any company.

Questions:

1. What is “reverse confusion” in an intellectual property trademark dispute?Â

2. What evidence did the plaintiffs in the case present as documentation?

3. What did the Learning Channel and Discovery fail to do before beginning the show?

4. How should either company report the settlement of this litigation in their financial statements?